5. You put half of your money in a stock portfolio that has an expected return of 14% and a standard deviation of 24%. You put the rest of your money in a risky bond portfolio that has an expected return of 6% and a standard deviation of 12%. The stock and bond portfolios have a correlation of .55. What is the standard deviation of the resulting portfolio? 6. The standard deviation of return on investment A is.10, while the standard deviation of return on investment B is .05. If the covariance of returns on A and B is .0030, what is the correlation coefficient between the returns on A and B?
5. You put half of your money in a stock portfolio that has an expected return of 14% and a standard deviation of 24%. You put the rest of your money in a risky bond portfolio that has an expected return of 6% and a standard deviation of 12%. The stock and bond portfolios have a correlation of .55. What is the standard deviation of the resulting portfolio? 6. The standard deviation of return on investment A is.10, while the standard deviation of return on investment B is .05. If the covariance of returns on A and B is .0030, what is the correlation coefficient between the returns on A and B?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Can you complete these questions with work shown please? Thanks!
Transcribed Image Text:5. You put half of your money in a stock portfolio that has an expected return of 14% and a standard deviation
of 24%. You put the rest of your money in a risky bond portfolio that has an expected return of 6% and a
standard deviation of 12%. The stock and bond portfolios have a correlation of .55. What is the standard
deviation of the resulting portfolio?
6. The standard deviation of return on investment A is.10, while the standard deviation of return on
investment B is .05. If the covariance of returns on A and B is .0030, what is the correlation coefficient
between the returns on A and B?
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